Several phospholipase A2 (PLA2) inhibitory proteins have recently been suggested to regulate the arachidonate cascade and may act as endogenous antiinflammatory agents in vertebrates. Some of these inhibitors are structurally related and are collectively known as lipocortins. Uteroglobin (UTG) is a potent PLA2 inhibitor but genetically distinct from lipocortins. Because of their similarity in function (i.e., PLA2 inhibition) we compared the structure of these proteins. We found that there is considerable peptide sequence homology between lipocortin I and II and UTG and a striking similarity in the hydropathy profiles of UTG, the corresponding regions of lipocortins and PLA2. Based upon these results we have custom synthesized peptides of these homologous regions and tested for their PLA2 inhibitory activity. We found that these peptides are 1000 times more potent PLA2 inhibitors than UTG as a whole molecule. The results suggest that these peptides may be the active sites responsible for the PLA2 inhibitory activity of UTG. When these peptides were tested in vivo they were found to be extremely potent antiinflammatory agents in carragennin-induced inflammation in the rat. Because of its potential medical importance as an antiinflammatory agent, we have initiated and been successful in producing this protein in E. coli by recombinant DNA technology. Recently, we have discovered a human counterpart of this protein.